Labor Markets

Labor Markets - Main Concepts The market for inputs The...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Main Concepts ± The market for inputs ± The demand for labor and capital ± The supply of labor ± Equilibrium wage and interest. The Circular Flow of Goods and Money
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 The Demand for Labor derived demand: demand for a factor of production is derived from the demand for the goods or services produce by the factor. marginal revenue product of labor ( MRP ): the change in total revenue that results from employing one more unit of labor. MRP = MP × MR . The marginal revenue product curve for labor is the demand curve for labor. Labor Markets Equivalence of Two Conditions for Profit Maximization The firm has two equivalent conditions for maximizing profit. 1. Hire the quantity of labor at which the marginal revenue product of labor ( MRP ) equals the wage rate ( W ). 2. Produce the quantity of output at which marginal revenue ( MR ) equals marginal cost ( MC ).
Background image of page 2
3 Changes in the Demand for Labor The demand for labor changes and the demand for labor curve shifts if: ± The price of the firm’s output changes
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/14/2010 for the course ECON 001 taught by Professor Stein during the Fall '07 term at UPenn.

Page1 / 9

Labor Markets - Main Concepts The market for inputs The...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online